It was the day the stock market crashed—Tuesday, October 29, 1929, signaling the beginning of the worldwide economic downturn called the Great Depression (1929–39).

On Thursday, October 24, 1929, stock values declined rapidly following a five-year period in which the average price of common stocks on the New York Stock Exchange had more than doubled. The prosperity of the 1920s and the widespread sale and purchase of Liberty Bonds (U.S. government bonds) to help finance World War I (1914–18) had encouraged many Americans to invest in the stock market: With the market robust, timing seemed right for speculation and America’s experience with Liberty Bonds had made many people comfortable with and interested in investments. So when the stock market dropped precipitously on that fateful October day in 1929, the effects were felt by many. On the following Monday prices again plummeted; on Tuesday, October 29, stockholders panicked, selling off more than 16.4 million shares, and prices nose-dived. Institutions were also affected: Banks, also investors, lost huge sums of money, forcing many to close their doors. News of the stock market failure and bank closures caused many Americans to try to withdraw their money from their deposit accounts, leading to the famous run on the banks. The late-October financial crises marked the beginning of a decade of hard times.